memoranda
[In the summer of 1956, apparently on the initiative of Macmillan (chancellor of the Exchequer) and Sir W Monckton (minister of defence), a high-level ministerial ‘Policy Review’ committee was set up, with prime minister Eden’s support, to make a reappraisal of defence policy and British overseas commitments. Officials under Sir N Brook produced a report, ‘The future of the UK in world affairs’ (see D Goldsworthy, ed, The
Conservative government and the end of empire, 1951–1957, BDEEP, 1994, part I,
document numbers 20 & 21). The work of the committee was incomplete owing to the Suez Crisis and the change of government. In Nov 1957 Brook—prompted by Sir F Hoyer Millar of the FO (CO 1032/166, letter to Brook, 9 Oct 1957)—suggested to Macmillan that a fresh review might be appropriate, in the light of changed circumstances: ‘Our position in the Middle East has undergone a radical change. A new phase of Anglo–American co- operation is opening. We are being compelled to review our earlier conception of the capabilities of the Soviet Union as a technological rival. We are facing renewed economic difficulties. And we are drastically modifying our defence programme’. The FO was keen to have a comprehensive assessment of essential overseas interests and the deployment of resources. The permanent under-secretaries of the FO, CO, CRO, the Treasury and Defence could undertake it. Macmillan agreed, provided it did not lead to too many or too lengthy papers or to overburdening of officials (PREM 11/2321, minutes 25 & 28 Nov 1957). Despite this, when the report arrived in June 1958 (see document no 5), Macmillan appears to have been dissatisfied with it; at all events, in June 1959 he called for a more comprehensive review of overseas policy as something needed for consideration by a new administration after the autumn election (document no 8). Although Sir N Brook was put in overall charge of this large investigation, the main input was from a Working Group chaired by Sir P Dean of the FO. It started by collecting such papers as the previous report on the position of the UK in world affairs, the Africa Committee’s report on ‘Africa in the next ten years’ (document no 20), and despatches from Malcolm MacDonald in India (documents nos 7, and 529 in Part II). The planning exercise was given the title of ‘Study of Future Policy, 1960–1970)’; the intention was to produce something akin to a blue- print, or at least a ‘crystal-ball’, for future overseas policy in all its aspects (FO 371/143702, ZP 25/2, 3, 10 & 12).]
. . . The papers
3. (a) The Foreign Office contribution. This consists of a covering paper (pages 1–13a) discussing our aims, our principal political and military commitments and the use of our resources, and a series of detailed annexes (pages 14–75). The Annexes can probably be ignored for the purposes of this meeting. The most important passages in the covering paper, which it is hoped the Permanent Under-Secretary will have time to read in full, are paragraphs 5–8 and 41–42. Mr. Ormsby-Gore’s comments on the first draft of the paper were included.
4. (b) The Colonial Office and Commonwealth Relations Office contributions. These are interesting papers, on which a number of comments could be made, but they do not bear directly upon the principal issue which confronts the Foreign Office (see paragraph 6 below). A look through the attached summaries will probably suffice. An important question, not discussed in the C.R.O. paper, is whether India, in her struggle to maintain her First-Year Plan, will be such a drain on the Sterling system as to frustrate our hopes of building up our reserves.
5. (c) The Treasury contribution. This is a very good and important paper and should be read in full, as any summary might be misleading.
The main issue
6. The main issue is whether the economic situation and the financial policy which has been designed to meet it can be reconciled with the expenditure overseas which will be necessary to maintain the United Kingdom’s position in the world. Our object should be to ensure that the Foreign Office and the Treasury stand together in agreeing that neither foreign nor financial policies can be weakened if our ultimate objectives are to be attained.
7. We should therefore express full agreement with the Treasury paper, subject to certain clarifications (para. 8 below) since the paper does not set out a point of view incompatible with our own. Their line of thought seems to be that, if Sterling weakens, the United Kingdom will not be able to maintain its present commitments either at home or overseas, and that economies must be found if this is to be prevented. We should agree, but the question is where are the economies to be found? In our view, the exercise should reach agreement on the essential nature of both financial and foreign policies, recognise that both may need intensifying in certain directions and conclude by presenting to Ministers the choice of cuts in unproductive home expenditure or severe damage to our interdependent foreign and financial positions.
8. In general, the Treasury paper does not seem inconsistent with this line. It concentrates naturally upon our economic aims, and some correction of this emphasis is needed to bring it into overall perspective. Thus the paper rightly emphasises the basic importance to our economic aims of foreign confidence in our belief in the Sterling Area (paragraph 14). Equally important to the same aims, in our view, is foreign confidence in our political future as a power with world-wide influence and interests. Similarly, in paragraph 17, the Treasury state that additional external investment would secure us greater dividends than additional expenditure on anything else. Our acceptance of this thesis depends upon how widely investment is defined. If it is defined widely so as to include action to support our political position abroad which in turn supports our commercial position, we can accept it. If not, i.e. if it is to be confined strictly to putting money into Government or private enterprises in the financial sense, we could not do so.2
The Foreign Office paper
9. In introducing the Foreign Office paper, therefore, the Permanent Under- Secretary may wish to emphasise and seek to secure agreement on our basic and subsidiary aims (para. 5–7 of the paper) and go on to make the following points:
(a) The needs of foreign policy cannot be totally subordinated to the need to build up our financial resources. Both foreign and financial policies depend on each other’s success. Merely holding on to our present international position is bound to become increasingly expensive because
(i) costs are rising;
2Sir P Dean minuted that he agreed with paras 6–8: the FO and Treasury views were ‘already pretty close’, but ‘we cannot go so far as they would wish in saying that everything must be sacrificed to reinforce sterling during the next few years and that this means that there can be no increase in our expenditure overseas’; some (comparatively small) increase might be necessary ‘if we are not to lose a great deal in other fields while the financial situation is being restored’ (3 Feb 1958).
(ii) in a sharply competitive world we have to do more in order to maintain our relative position; like the Red Queen, we must run very fast in order to stay in the same place (para. 8 of Foreign Office paper). There are cases where failure to spend now may mean total loss later.
(b) Given the position, population and organisation of the United Kingdom, the cost of maintaining our position abroad is astonishingly small (the Foreign Office vote and Grants and Services Vote in 1957/8 were estimated at £30.5 million out of a total of £80–100 million on all civil expenditure overseas). Compared with Defence (£1,629 million) it is a cheap way of maintaining our security; compared with consumption (£13,409 million) it is tiny. Moreover, we are at present in a position to spend money profitably if we can find it. All over the world friendly Governments, especially in the Middle East and Asia, are clamouring for help in development, defence, etc. We cannot, and indeed should not, do more than a very small fraction of what they want, but there are both big dividends to be won at little cost by modest but rightly directed response, and risks of eclipse if we fail to respond at all.
(c) The policy of Anglo–American interdependence is likely to involve us in some extra expenditure if it is to remain Anglo–American. There is the policy of “containment”, towards Syria, to which we have not yet made any significant contribution, and the Economic Measures Working Group in Washington may soon be recommending action in individual cases involving expenditure. The United Kingdom will have to prime the American pump; we cannot expect United States co-operation in these important fields of policy unless we can contribute something, however small, to meeting the costs (paras. 17–18 of Foreign Office paper).
(d) There is a pressing need for a contingency fund (paras. 41–42 of Foreign Office paper). Unforeseen and unforeseeable requests for new commitments are constantly arising, and our success or failure in meeting them can make all the difference to the achievement of our aims. The problem of aircraft for Iraq is a current example. If we had been able to help the Iraqis and forestall United States intervention, we should not have risked losing a valuable commercial connexion, and perhaps also political influence in a quarter in which specifically British influence is valuable to the West. Other recent cases have been Polish credits, our inability to provide Nepal with rope-ways, and our insistence on being repaid £2,000 by the Libyans for a locust-control operation. In the last case we presented this absurd bill a year after the event and lost a good deal of face. There are two points here:
(i) occasionally we need to be able to help on a big scale, and stand to suffer a really important setback if we cannot; this has to be dealt with ad hoc.
(ii) periodically we are confronted with smaller but urgent demands: if we can meet them it helps enormously to cement good relations, while if we cannot, it loosens them. It is for this that a contingency fund is needed. There is already the A. 10 subhead for counter-subversion contingencies, but its use is narrowly defined and it is small (£20,000 annual limit).
(e) The Foreign Office votes are lower this year than last and will be lower again next year. We are doing all we can to achieve economy. Despite increased salaries and rising costs, the estimates for the Foreign Office vote for 1958/9 will be below the net expenditure of the previous year. The Grants and Services votes for 1957/8
were only £15 million (compared with £25 million the previous year), and the estimates for 1958/9 will be down to £12 million, though there will have to be supplementary votes of £3 or £4 million in July (Libya etc.). We are, in fact, one of the few Government Departments to have carried out the economies required. But we are doing so at a risk. The downward trend cannot continue without damage to our prospects of achieving our aims, including those in the economic and financial field.
The handling of the exercise
10. It is important that the exercise should not drag on. The Prime Minister agreed that it should be held provided that it did not take up too much time and paper, and there is already a tendency on the part of the Treasury to insist that proposals for new expenditure should await its outcome. We should therefore press on with it as quickly as possible.
11. The best method of handling it might be for the Cabinet Office (perhaps Mr. Trend) to collate the various papers with the object of arriving at
(a) agreed aims
(b) an agreed list of essential commitments
(c) an agreed minimum figure which must be set aside for overseas expenditure if our aims are to be fulfilled.
It may be desirable, if this proves necessary, to provide officials from the Foreign Office, Treasury, Colonial Office and Commonwealth Relations Office to assist in this work.
12. It would not be desirable to turn the work over to existing official Committees such as the Africa Committee and the M.E.O.C.:—
(a) there are no such committees for Asia and it would take too long to set them up; (b) The Africa and M.E.O. Committees are not suitably constituted. They have on them representatives from departments which are not concerned with this exercise;
(c) the basic papers having now been produced, it should be possible to reconcile and collate them without referring the work to further committees.
P.E.R. 3.2.58 Annex to 4
A. Summary of memorandum by the C.R.O.
1. Objective: maintenance of cohesion and United Kingdom leadership of Commonwealth. If Commonwealth disintegrated, United Kingdom would lose status superior to that of a continental European power. Association with Commonwealth greatly enhances our influence with our other allies and with our emerging colonial territories, with whom we could not continue to be linked if the Commonwealth framework was not in existence.
2. Different values attach to different links with individual territories. Politically, some members are actively anti-Communist, others “uncommitted”, but at least the existence of the Commonwealth keeps them “uncommitted”. Economically, all are important. Any defection from it would greatly weaken its value. To keep all members
within the Commonwealth will require us to stress different elements of policy to different members, but overall policy must be to maintain its cohesion.
3. Cohesion depends on continued United Kingdom leadership. Responsibilities of leadership are entailed by its advantages for us. No Commonwealth association: no world power status. No world power status: no Commonwealth. No Commonwealth: no strong pound. No strong pound: no Commonwealth.
4. United Kingdom leadership depends on:
(a) Political. Retention of influence with U.S.A. and other allies and in playing leading role in handling relations between Soviet and Western blocs. Hence we must have an independent voice in world affairs, but this depends on our remaining a nuclear power.
(b) Strategic. (For certain members) on maintaining reasonable defence forces in certain areas. But our defence policy already takes account of these requirements. (c) Economic. Maintenance and expansion of trade within Commonwealth. This depends on:
(i) a strong pound. If we do not exert the effort others will not either. “The conditions for this, and the reasons required are well known”.
(ii) maintenance of long-term investment in the Commonwealth. Given the world economic situation, we should encourage members to seek capital from non-United Kingdom sources even, possibly, from Russia. But the United Kingdom must make major contribution. Level of investment in Commonwealth (now c. £200 million a year [it is not clear if this means United Kingdom investment only]) must be maintained, even raised. We must be able to respond to special appeals for help and on occasions pre-empt Russian offers where likely to do serious harm (though generally economic and cold war considerations should be divorced). We must make scientific and technical know-how available to less developed members.
(d) Sentimental. We must foster exchanges and visits, cultural, parliamentary, scientific. Small sums spent on British Council, teaching of English, information work etc. will reap heavy dividends.
B. Summary of memorandum by Colonial Office
1. Description of United Kingdom colonial policy. Objective is to promote achievement of independence (within Commonwealth) or of maximum degree of internal self-government for Colonial territories too small to be reasonably self- sufficient, in conditions of political stability, rising standards of living and freedom for individual. Hence to assist territories to stand more and more on their own feet, politically, economically and socially.
2. This policy is a moral obligation but 3. It is also in our interests to adhere to it for
(a) Economic reasons. Although high current account surpluses for colonial territories are unlikely to occur again in the foreseeable future and there will be some drawing on colonial sterling balances, our remaining colonial territories are likely to be in many, if not most years, net contributors to our gold and dollar reserves. Premature withdrawal would lead to collapse of markets and sources of supply for the United Kingdom. Withdrawal too long delayed might have this result also, and would in addition encourage newly independent territories to leave
the Sterling Area. In some cases this could be very serious. Timely grants of independence would not endanger economic links with the United Kingdom.
The United Kingdom must make sacrifices to maximise long-term investment in colonies. Total capital investment in recent years on private and public account from all sources has averaged £200 million p.a., of which £40 million each from United Kingdom Government and dollar sources. Needs for external loans will exceed £25 million over next few years. Non-United Kingdom sources are being encouraged to help (e.g. Canada for the West Indies) but United Kingdom must assume large part of the burden if economic development is not to be seriously hampered.
(b) Strategic reasons. Specific strategic needs may change, but the United Kingdom has an overall strategic interest in maintaining stability and goodwill without which strategic requirements cannot be assured, before or after independence.
(c) Political reasons. It might be argued that the United Kingdom should relinquish colonial responsibilities as soon as possible, in view of post-war attacks on us for being a colonial power. But the constructive nature of our colonial policy is being increasingly recognised and to abandon it would mean a great loss of prestige, play into the hands of the communists and extreme nationalists and jeopardise “evolving Commonwealth” policy which offers best hope of reconciling emergent nationalism with our interests.
4. There are some colonial territories where it might seem to be in United Kingdom interest to abandon our obligations. But to do this anywhere, would undermine confidence and imperil our policy everywhere. Policy must be maintained as a whole, even if detailed application to particular territories must be considered in relation to those territories.
5. Increasing importance must be attached to this policy in its own right and as part of wider Commonwealth policy “which provides for the world, hope of continuing stability and, for the United Kingdom, the only alternative to progressive political and economic deterioration”.
5
CAB 130/153, GEN 624/10
9 June 1958
‘The position of the UK in world affairs’: report by officials
IntroductionThe purpose of this study is to assess the role which Britain can play in world affairs to-day and to examine how our resources can best be used in support of that role.
2. We can no longer operate from the position of overwhelming strength— military, political and economic—which we enjoyed in the heyday of our Imperial power. But, although we no longer have superiority in material strength, we can still exercise a substantial influence in world affairs—partly in our own right and because of our position in Europe, and partly as the leader of the independent Commonwealth. We must now bring that influence to bear, in support of the superior material strength of the United States, in the world struggle between the